Bridgetron
an Analyst Wants to Value the Sum of the Debt

question 28

Essay

Bridgetron
An analyst wants to value the sum of the debt and equity capital of the firm and is provided with the following information:
$\begin{array}{l}\begin{array}{l}\text { Total Assets } \\\text { Interest-Bearing Debt } \\\text { Average Pre-taxborrowing cost } \\ \text { Common Equity: } \\\text { Book Value } \\\text { Market Value } \\\text { Income Tax Rate } \\\text { Market Equity Beta } \\\text { Risk-free Rate }\\\text { Market Premium }\\\end{array}\begin{array}{lll}\$ 25,675\\\$ 18,525 \\9.25 \% \\\\\$ 8,950 \\\$ 34,956 \\35 \% \\1.05 \\3.8 \% \\5.7\%\end{array}\end{array}$
-An analyst wants to value the common shareholders' equity of Bridgetron,compute the relevant cost of capital that should be used.

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Definitions:

Sensory Memory

The shortest-term element of memory that allows for the ability to retain impressions of sensory information after the original stimuli have ended.

Long-term Memory

A type of memory in which information is stored for an extended period, potentially for a lifetime, and includes facts, experiences, and skills.

Capacity

The highest limit something can hold or generate, or the capability to execute, grasp, or soak up something.

Memory

The mental process enabling us to record, preserve, and recall past information.